Online gaming moves one step forward

State Treasurer Steven Grossman is seeking legislative approval to allow the state Lottery to offer gambling online on home computers using credit cards, starting later this year.

Legislation that would authorize the Lottery Commission to begin putting lottery games online for use by adult state residents has been filed by state Sen. Jennifer L. Flanagan, D-Leominster.

Mr. Grossman said that if the legislation is approved, the Lottery Commission, which he oversees as treasurer, would be ready to put a suite of initial games online on a pilot basis sometime later this year.

He said, however, that the commission would only move forward with online gaming once a system is developed that will provide a role for the 7,400 retail lottery agents in convenience and liquor stores and other retail outlets.

Also, he said, provisions have to be made to discourage addictive gambling behavior.

Mr. Grossman said he expects an explosion of online gambling in the coming years and he wants the state Lottery to be in a position to hold on to its franchise in the gaming market, which now delivers more than $900 million annually for unrestricted state aid to cities and towns.

He said a December 2011 ruling by the U.S. Department of Justice that amounted to a new interpretation of the federal wire act, allows states to start online gaming of all sorts, except for sports betting, using credit cards.

“The threat from the Internet is imminent. Doing nothing is not an option. We need to move forward and test appropriately,” Mr. Grossman said, primarily to protect and enhance local aid.

If the legislation is approved, the Lottery Commission would look to begin testing games online in advance of any major rollout of online gaming, he said. “Sometime this year we would like to be testing some things,” he said, but added, “There is no specific timetable.”

Mr. Grossman said a system that requires players to purchase cash credits for use in online games using personal credit cards may be one way to ensure a continuing role for the army of sales agents in convenience and liquor stores around the state.

That type of system, he said, would allow licensed lottery agents in retail stores to continue to receive a 5 percent commission on sales and a 1 percent share of winnings and ensure continuing foot traffic lottery sales bring into their stores.

By placing a limit on credits that can be purchased, for example of $100, he said, the state could also discourage addictive gambling problems.

“We are committed to making sure the lottery agents have a significant role to play” in online gambling, Mr. Grossman said.

Ms. Flanagan filed the legislation after serving on a state commission set up by the treasurer that recommended last year the Lottery move into online gaming. She also sponsored the 2011 casino and slots license bill in the Senate that has led to the scramble under way for three casino licenses and one slot parlor license in the state.

She said Tuesday that the decision to move into online gaming is more a matter of the form gaming takes than whether the state should offer more gaming.

“This isn’t a debate over whether you like gaming or not, this is a debate over the fact that we have to move to online gaming,” to protect state revenues, she said.

She said she sees the two-page bill to authorize online lottery games that she filed last week as the start, not the end, of a debate over how the state should proceed.

“This is a complex matter. The legislation I filed starts that conversation and in no way, shape or form determines the outcome,” she said. She expects the Legislature to consider ways to ensure licensed lottery sales agents have a continuing role in online lottery gambling.

“We want to make sure the local business owners are not harmed,” Mr. Flanagan said, noting that the retail operations provide thousands of jobs statewide.

Lottery officials have said they may look to use a new online form of instant ticket games, a daily numbers game and the traditional Powerball, Mega Millions and Lucky For Life jackpot games online if the legislation is approved.

Lottery officials have also said a state Lottery gaming site could also eventually feature Keno, and other games of chance. The lottery is also exploring so-called “social gaming,” such as an online fantasy sports game, which officials said may or may not have a cash prize component.

“This whole issue is a work in progress, because we are going into uncharted territory,” Ms. Flanagan said. She said the bill will be sent to a committee and she expects public hearings will be held on the proposed new law.

Mr. Grossman said he would not seek a state appropriation for a purchase of technology, equipment and staff for a major expansion of online gambling until state Lottery officials first test products and build a model they know will work well.

“I don’t want to spend a dime of taxpayers’ money until we are certain we have a new product line that we have tested,” he said.